Honeywell's Lawsuit Against Nest: The Perfect Example Of Legacy Players Using Patents To Stifle Innovation

from the if-you-had-invented-nest,-you'd-be-making-nest-devices dept

I'd been meaning to write about this lawsuit ever since it was filed, but other stuff got in the way, so this is a bit of a catch-up post, to go along with Honeywell's response to Nest's counterclaims (which we'll get to in a bit). But the key to this highly questionable lawsuit is that electronics giant Honeywell wants to use the patent system to effectively kill off the well-hyped Nest thermostat. Nest, a company that launched just last fall, got some well-deserved attention for applying an Apple-like design sense to everyday gadgets -- starting with the lowly thermostat, a device that really hasn't seen that much innovation in quite some time. The product was, indeed, a pretty big leap forward, and I know a bunch of people who have Nest devices and love them.

But, of course, under a crony capitalist system, the incumbents can't have any of this nasty "disruption." Honeywell was not pleased. Bizarrely, just days before Honeywell filed the lawsuit, it had told GigaOm that it had built something similar to Nest but killed it off because consumers weren't interested. Yeah, this certainly sounds like a company jealous that Nest actually figured out how to truly innovate (bring something to market in a way consumers want) rather than just invent (create something new).

The simple fact here is that consumers really seem to like the Nest, and apparently Honeywell is ill-equipped to compete in the marketplace. So it's response is to sue and try to kill off the competition. It's a sickening display of a legacy company resting on its laurels afraid to actually compete in the market against a disruptive player that's younger and nimbler and actually in touch with what consumers want. Out of this, we get some absolutely ridiculous claims, such as the suggestion that Honeywell has patented the idea of a thermostat asking you what temperature you like, and only Honeywell could do such a thing:

Honeywell also seems to suggest that merely connecting a thermostat to the internet infringes on its patents, because, of course, no one else could have possibly thought of connecting home devices to the internet before Honeywell came along. While the filing also does highlight some evidence that Nest looked at Honeywell thermostats, isn't that how competition works? You look at what others are doing, and figure out how you can do it better? Basically, what Honeywell seems to be admitting is that it can't do it better, so instead it will sue.

Nest's counterclaim hit back pretty hard on a bunch of these points, stating upfront:

This lawsuit is a bald effort by Honeywell to inhibit competition from a promising new company and product in a field that Honeywell has dominated for decades. Nest Labs, with its Nest Learning Thermostat, has generated consumer and critical enthusiasm around the home thermostat -- a device that most people had long since written off as a bland, dumb appliance.... That "blah-looking controller" on the market today is very often from Honeywell, which has long dominated the thermostat market, but has yet to generate a device that offers ordinary consumers as much as the Nest Learning Thermostat. Instead of countering product innovation with its own new products, Honeywell has a track record of responding to innovation with lawsuits and overextended claims of intellectual property violations.

Nest also points out that Honeywell has lost previous lawsuits that similarly appeared to be bullying competitors. The Nest response doesn't just call out the company for what it's obviously trying to do, but further claims that all of the patents are "hopelessly invalid" and points to prior art that raises significant questions about the validity of the patents in play.

Nest also files some counterclaims for declaratory judgment -- which basically start out as a long commercial about Nest and how awesome everyone thinks it is. While this may seem out of place, there's a reason for this. The company is trying to demonstrate that it's not just a clone of Honeywell, but that it (not Honeywell) is the true innovator here. It not only pumps itself up, but provides plenty of evidence of Honeywell's own failures to innovate.

The latest news is that Honeywell has now filed its own response to Nest's counterclaims and (not surprisingly), Honeywell is not at all happy. It says that Nest's counterclaims are "self-serving characterizations based on Nest Labs' unfounded opinions and speculations that are irrelevant to Honeywell's valid claims..." These are legal filings, so I'm pretty sure that all of them are "self-serving." As for whether or not they're "unfounded opinions and speculations," that seems like a pretty big stretch from Honeywell, in an attempt to smear any competition making valid legal arguments against them.

Either way, it does not seem like either side is likely to back down any time soon. So, what remains is a classic case of a legacy industry player who failed to adapt reacting to the young upstart everyone likes by going legal, rather than actually competing. This is pretty short-sighted. If it actually competed in the market it might learn why people like the Nest device and why they're buying them instead of Honeywell thermostats. All I know is that my house has a Honeywell thermostat currently, and this lawsuit makes me much more interested in buying a Nest device to replace it.

Of course we should sue Nest for competing against Honeywell. I mean, look at how old Honeywell is. Do you see 106-year-olds playing soccer with younger players? Really, you should just listen to Honeywell tell stories of its glory days instead of playing Capitalism with him.

Nest's commentary is self-serving, being little more than a colorable imitation of a product brochure touting what a great design its product comprises and that people "really, really like it". These are not facts relevant to the issues raised in the complaint, so their inclusion is purely gratuitous...and Honeywell is quite correct in how it characterizes what Nest repeatedly states in its Answer and Counter-claim.

What is relevant here is whether or not the Nest product infringes one or more of the patents being asserted by Honeywell. If it does, all the "coolness" in the world is of no moment.

As for the litany of horribles alleged by Nest against the patents and Honeywell, this is not exactly surprising. In fact, I daresay Nest's counsels are definitely not innovative in that they are basically carbon copies of what every alleged infringer throws into an Answer to a Complaint alleging patent infringement.

About the only take-away from your article I have been able to identify is your deep seated animus towards anyone who happens to have a patent and asserts it in a court of law.

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As a holder of an international patent, and a better than average knowledge of what is and isn't patentable, I have to agree with Mike on this one - Honeywell's assertions are totally absurd and legally untenable.

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yes because the idea that you can set a temperature to cool to and a temperature to heat to would never have been thought of if not for honeywell. if there was actually any common sense in the patent office, then those patents would never of been granted because they are an obvious evolution in the technology.

Oh yeah the idea of hooking a thermostat to the internet is a HUGE breakthrough. NOT. I work as an automation programmer. The amount of devices I have made remotely available via internet is ridiculousness. This does not even begin to count the devices that were automated for use with Ye olde palm pilot.

What Nest did was make it easy for a standard home owner to have a smart thermostat that was easy to use. I have come across way to many interfaces that have taken me a good amount(15+ minutes) of time to figure out. Generally if it takes more then a minute for a user to understand operation, IT WILL NOT GET USED on a regular basis. After that point, any desired operation needs to be as few as step as possible.

Also patenting a QUESTION? How screwed up is that. How is that question anything out side of fact?

Just looking at the interface for the HWell makes me cringe. I do not want to know how many levels you have to jump through to get there. It looks like you have to answer each question.

Who here can read the nest interface and say exactly what the Cool and Heat set points are? How long does it take on the HWell side. No wonder HWell is suing.

Response to: Anonymous Coward on May 8th, 2012 @ 9:24pm

Interesting viewpoint. What I took away from this is that Honeywell's patents are a crock of shit and they're using this toilet paper to try and block some real competition and innovation. Seemingly this is something Honeywell are incapable of.

I keep seeing this claim used often. That [Company] is the only company who could possibly have invented or dreamed of a certain invention or innovation. Is that seriously a valid legal argument? If a company can create the same innovation outside of the influence of the first company, is the second one really infringing?

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That should render any patent the first company has on the the particular innovation. You would just have to prove you did not look at their patent for it. That would give you drive to keep innovating if you knew your patent was only good if some one else did not come up with the same idea elsewhere.

Re: WTF???

"What is relevant here is whether or not the Nest product infringes one or more of the patents being asserted by Honeywell. If it does, all the "coolness" in the world is of no moment."

Comments like that are so insanely stupid they deserve a "moron award". If you looked into this story and the interview with Honeywell where Honeywell clearly states that they looked into the market and found that consumers do not want a learning thermostat and they scrapped the idea 20 years ago, then you wouldn't make comments like that.

Why do patents exist? So that people can bring things to market. If you get a patent and then decide that you don't want to bring something to market then you don't deserve the patent.

For all the shills out there. If you are holding onto a patent and waiting for someone else to get rich so you can swoop in and sue them after they did all the WORK bringing the product to market, then you are in essence the INFRINGER.

i personally dont care who makes what. as long as the product i buy does the job i want it to do as efficiently as possible, as maintenance free as possible, requiring as little interference from me as possible, lasts as long as is reasonable and is at a sensible price, i am happy.

Just look at all the progress bestowed upon society by this Honeywell patent alone. Yes my friends, it is good to see the patent system operating like the well oiled machine that it is. It greases palms, primes the pump, lubes the ....

I got one

I bought a Nest thermostat about a month ago and love it. Being able to check and change the temp in my house from anywhere via my phone is so nice. Or if I'm gone longer than expected, the thermostat automatically goes into an Away mode and helps save energy. Lots of other cool features too, like it looking just plain awesome for instance. But why did I buy one in the first place? I was thinking about it for awhile, and I didn't want to lose out on an awesome product via some other idiot company trying to stifle innovation and taking it off the market. Plus, if it can save 30% on my bill, it will pay itself off in just a couple months.

Nest replaced my Honeywell months ago. Nest has an auto away feature. If it senses no movement in the house it turns the temperature down or up depending on if you have it set to heat or cool. The image above shows the screen where you set the maximum range of the auto away temp. The EZ Schedule in the Honeywell Images is totally different.

In true Apple fashion Nest is not only pretty but simple to use and install. If I could have found a Honeywell, or any other make of thermostat that was as easy to program and not an eye sore for the price of the Nest I would have bought that.

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The claims by Honeywell do not claim that the Nest product is "substantially similar" to Honeywell's products. What Honeywell is claiming is only that the Nest product incorporates subject matter Honeywell believes lies within the scope of one or more of Honeywell's patents.

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What is relevant here is whether or not the Nest product infringes one or more of the patents being asserted by Honeywell. If it does, all the "coolness" in the world is of no moment.

The "coolness" of the Nest thermostat is only part of Nest's defense. The key part of Nest's defense is similar to your "relevant" question. That is the question of the validity of Honeywell's patent. Nest is arguing that Honeywell's patents are invalid due to a variety of factors including prior art. The fact that you ignore that just shows that you are ignoring the greater issues in the patent scene.

The stupid path

What drives me crazy is that the Nest is certainly something that can be successfully competed with. The price is way too high, and while the distinctive look is great, it isn't for everybody. It would be great if it could network with a bunch of passive thermostats and deliver better whole house temperature control. Heck, if it's good at sensing people, it could control lights as well.

This is a product in it's infancy, and Honeywell could easily innovate in this space, but instead it chooses to litigate.

I think I'll be avoiding Honeywell products from now on - it's time for them to get out of the way.

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If you can infringe on a patent without making a product substantially similar to the patent holder's, and all the basic components are no longer patented, then the patent is too broad. What does Honeywell even have patented here? Connecting an appliance to the Internet? Using words to prompt the user to enter their preferred temperature range?

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I am not ignoring it at all. In any lawsuit involving patent infringement a named defendant invariably responds to the complaint with averments that its product(s) do not infringe, as well as responding with what are known as affirmative defenses that the patent(s) are invalid for as many reasons as the fertile mind of counsel can conceive.

While the facts here are a bit involved, the initial procedural steps associated with a lawsuit are common to virtually every such lawsuit. A complaint is filed, an answer is filed, and the process then moves on to the next stage known as discovery. The only difference between this matter and most others is that the defendant has elected to file counterclaims listing a host of reasons why, even if the patents are deemed valid and infringed, the plaintiff is such a "bad actor" that the patents should be deemed unenforceable.

BTW, "coolness" is totally irrelevant to patent infringement lawsuits, so even mentioning it is a waste of time and paper.

Before my current job (working for Honeywell), I was in the HVAC industry. Honeywell is one of maybe only two or three major competitors in the high-end thermostat field; the reason there hasn't been much innovation in thermostats in a while is because there's really not that much more you can do to improve upon them, short of mounting an iPad to your wall, and who wants that?
Oh, wait. Someone else figured out how to do it, AND keep it moderately simple/small enough that consumers want it? We can't have this. Lets use that good old fashioned capitalist mentality to brute force them out of the picture. If we happen to be able to reverse engineer a few good ideas out of it, maybe we'll even name our next model after them in tribute. Yeah, we'll call it the Bird, or something. Remember, as John D. Rockefeller once said, "competition is a sin."

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I'm going to go find where online I can buy this Nest thermostat, then I'm going to check my thermostat when I get home tonight, and if it's a Honeywell I will strongly consider ordering a new thermostat.
I am sick and tired of this litigation happy society we live in, and I want to support companies that create innovative, competitive and most importantly, useful products that will benefit me or my family, and do what I can to support them fighting back against legacy companies that are unwilling to legitimately compete in the marketplace.

I hate to say this but...

Those of us who have gone overboard setting their houses up with home automation, already hooked our heaters and ac conditioners to the internet. I remember in 2001 when I used my home automation software and a clever little script to turn my heat/AC on when I left work through my website so it would be cool/warm when I got home.

I also work in HVAC. There has been a niche market for this aplication for years. Most homeowners I deal with just want it on or off at a certain temp. Just as Berenerd set his system up via a remote location setpoint demand. Anyone who could CHEAPLY idiot proof a remote system for most of America could be on to something.

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Thermostat patents

WRT to the claim of the wheel in thermostat, everybody has to understand that Honewell has been around a long time and probably did invent the wheel. I think they own the rights to fire as well. Without fire a thermostat would be useless.

Blog Support

By the time this case reaches trial, Nwest will already be on Version 3. or 4. or even 5. Hahaha and all from the the positive 1000's of responses in the Nest blogs (each response independtly signed, tracable and unsolicited. If Nest only were to bring the Blogs to court and enter the blogs as independent evidence of what people want, think of the Nest and what they want from the Nest and how Nest has later delivered to their owners what they want, I believe that Honeywell would be laughed out of court. The blog would score a 5 out of 5. Honeywell had the brains and manpower and experience and track record and the customer base and the market to do in many of the last few technological years, what it took Tony and a few helpers at Nest less than 2 years to ackomplish without any HVAC knowledge. I believe Steve Jobs encouraged them and said create what is not there and think out of the box. And ergo, like the the iPad (my Tablet from 2004 never went too far) delivered not what the people asked for in the Tablet, BUT what the people needed once they learned to play with it. Yea for Tony. Tony, don't forget to send a thank you note for all the free marketing to Honeywell and for also help shift cutomers to Nest. One more thing, in Nest's financials , maybe catagorize all the legal fees, not as Professional Fees but as Marketing Expense. Good luck.

BTW, my May-June electric bill dropped from 300$ to 150$. My Nest was delivered from the 1st batch. When we hit version 4.0, my bill should remain at almost 1/2 forever. Honeywell, you are just a big joke!!